RM Seed Medium Term report

RM Seed Medium Term report

Since 5th of April’17 rape-mustard futures have declined by almost 13.31% to make yearly low of Rs 3471/quintal on 22nd June’17.

The prices moved on the negative trajectory due to surplus production in 2016-17 Rabi season along with lack lustre demand from buyers.

Moreover, expectation of rise in ending stock for rape-mustard seeds kept the prices lower during the aforementioned duration.

Meanwhile from the year low prices have recovered by 7% till 11th of July’17. It rose on back of gradual pickup in seasonal demand for mustard oil.

Lower arrivals at physical market also supported the trend in July’17.

Indian Balance Sheet

*Source- KCTL BAW #-RM Oilcake exports in equivalent of seeds

In 2016-17 the production of domestic Rape-mustard seed is estimated to have risen by 20% Y/Y. The acreage under Rape-mustard crop during 2016-17 is at 70.56 lakh ha up by 9.3% Y/Y.

The domestic consumption of India is also likely to rise by 13% Y/Y to 6.34 million MTs as lower mustard oil and oil cake prices may support domestic demand and exports.

The exports here depict the Rape-mustard oil cake exports which is estimated to rise by 65% on lower prices in 2016-17 oil year (Nov-Oct).

The ending stock is likely to rise by almost 41%, on higher production amid moderate increase in domestic consumption in the country.

Global Balance Sheet

*Source- KCTL BAW

For the year 2017-18, global rape-mustard seeds production is projected to increase by 5% Y/Y on the back of production increase in Canada, EU and Ukraine, which is growing by 13.5%, 3.3% and 68% Y/Y, respectively.

Globally rape-mustard imports are projected to increase by 1% with European Union and China being the leading nations.

The global exports are marginally declining by 0.5% Y/Y due to decrease in Australia’s exports, which are falling by 19% Y/Y to 2.6 million MTs.

However, Canada being the largest exporter of rapeseed, is likely to increase the shipment by 2% Y/Y to 11.2 million MTs.

The increase in domestic consumption of China and India by 2% and 13% Y/Y respectively is going to push the global domestic consumption by 2%

Crush Margin :

The crush margins since April’17 have remained in the negative territory

The crush margins did improve during the month of May’17, on pickup in demand from pickle makers and stockiest

However, with falling prices of mustard seed derivatives like mustard oil cake and Kachi Ghani, crush margins again moved into the red zone

Meanwhile, Kachi Ghani prices have also made fresh 2 year lows during last week of June’17 at Rs 697-698/10 Kgs

Oil Cake Exports (in MTs)

Rape-mustard oil cake exports in 2016-17 oil year (Nov-Oct) till June’17 is around 189,441 MTs, up by 72.8% on Y/Y for the same duration.

Lower mustard oil cake prices due to rise in its output amid overall increase in RM seed production favoured higher export sales. The FAS rates of mustard oil cake in 2016-17 has remained lower that of the previous oil year.

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